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					    Indirect Rates
Iowa County Agricultural
   Extension Offices
     Key Points of the training
   Understand the concepts of indirect costs,
    direct costs and allocated costs
   Understand the general guidance contained in
    OMB Circular A-87
   To learn how to construct a basic indirect cost
    rate proposal (single rate)
   To be aware of issues that might increase
    “audit exposure risk” for non-compliance
              SCHEDULE
Training on Indirect Cost Rate Proposals
Quick overview of basic concepts of cost and
indirect rates
OMB Circular A-87 and ASMB C-10 overview
Over view of sample forms and Instructions
Lunch
Walk-thru instructions and do some sample
exercises
Wrap up (2:30 – 3:00)
       Who is MAXIMUS, Inc?
National firm that specializes in various
consulting services to State/Local Governments
(NYSE MMS)
Cost Services Division specializes in cost
accounting, cost allocation, fees, federal grant
cost recovery
Cost Services Offices in the Midwest include
Illinois, Iowa, Minnesota, Indiana, others
Springfield Illinois office:
   Robert Antrim or Kurt Sames (217-789-0041)
    robertantrim@MAXIMUS.com
How much do you know about ...?
INDIRECT COST? Can someone give a
one sentence definition?
DIRECT COST? Can someone give me a
one sentence definition?
INDIRECT COST RATE? Can someone
tell me the two basic factors (Ratio of “A
“divided by “B”)
EXPERIENCE? How many have had
experience in using indirect cost rates?
How much do you know about . ..?
WHY do we use indirect cost rates?
    To recover some of the “overhead cost” related to the
     administration of federal and state grants
    Rates make it relatively easy, since no extensive
     tracking of costs to every indirect activity
WHEN should we use an indirect cost rate?
    When we have a timely rate on file that is completed
     in accordance with OMB Circular A-87
    And when award allows reimbursement of indirect
     costs
    And when we choose to claim (use as match)
    Basics – Indirect cost rates
INDIRECT costs are those costs that cannot be
readily assigned (without disproportionate effort).
 DIRECT costs are basically all other costs.
   Except for some “flow thru” or unallowable costs which are
    neither direct or indirect
An INDIRECT COST RATE is a practical (easy) way
to assign indirect cost to various “cost objectives”
   For example, to grant activities or other direct activities
Rates are ESTIMATES for a future period
   Calculated using one FULL FISCAL YEAR of actual costs
   Applied as ESTIMATES for recovery in some future fiscal year.
Rate are calculated on “ORGANIZATION-WIDE” basis
   The rate is NOT focused on individual grants
Basics – Indirect cost rates
       INDIRECT COSTS
           Divided by
   DIRECT COSTS (chosen base)
            Equals
     INDIRECT COST RATE
           (% Ratio)
    Basics – Indirect cost rates
EXCLUDABLE costs are left out of the
indirect rate ratio altogether
   Excludable costs may not require “material
    administrative effort”, and their inclusion could
    unfairly distort the rate calculation
   Considered “flow-through costs” like sub
    grants, debt service, capital, client payments
UNALLOWABLE costs are specifically
defined in OMB Circular A-87 (discuss later)
   Unallowable costs may or may not be
    included in the BASE (discuss later)
      Basics – Indirect cost rates
DIRECT COSTS – “BASE”
 Denominator in the Indirect/Direct ratio
  Direct costs are also known as the “BASE”
       for computation of indirect rates
 Several options exist for which “cost
 elements” are chosen for the Base
      “All Direct Salary and Wages” (S&W)
      “Total Direct Cost”, less excludable (TDC )
     “ Modified Total Direct Cost” (MTDC)
        Typically includes first $25K of each sub-grant
      Basics – Indirect cost rates
DIRECT COST BASE - Other key points
  CONSISTENTCY is important
   Same TYPE of “cost elements” included year-to-year
   Rate should be APPLIED to same cost elements as used to
    CALCULATE the rate
  Example: An indirect rate calculated using a S & W base should
    not be applied to the “Total Direct Costs” of a grant
 EXCLUDABLE COSTS
     Both Total Direct Cost (TDC) Base and Modified Total
      Direct Cost (MTDC) base, should exclude certain
      “flow-through” expenditures that might distort the rate
      calculation - like capital, debt service client payments
     MTDC excludes amount over the first $25K of each
      sub-grant (typically)
      Basics – Indirect cost rates
OMB Circular A-87
 Indirect cost and direct cost guidelines are
 discussed in Federal OMB Circular A-87
 Why is the Federal government interested?
     Because the federal government provides significant
      grants to states and local governments
     Federal reimbursement is sometimes based on
      documented ACTUAL COST of providing services
     The Federal government determined that it was
      necessary to define what ACTUAL COST means!
  Next we will review some of the OMB Circular A-
  87 “Actual Cost” Principles
   OMB CIRCULAR A-87


COST PRINCIPLES FOR STATE
 LOCAL AND INDIAN TRIBAL
      GOVERNMENTS
     OMB CIRCULAR A-87
KEY POINTS OF THIS SECTION OF
TRAINING
   To discuss the importance of and the general
    guidance contained in OMB Circular A-87
   To learn some of the important cost principles as
    defined in the Circular
   To learn basics on allowable and unallowable cost
   To introduce the A-87 “ASMB C-10 Guide”
      Published by U. S. DHHS
      ASMB C-10 is the “Implementation Guide for OMB
      Circular A-87”
          OMB CIRCULAR A-87
                     General
“COST PRINCIPLES FOR STATE,
LOCAL, AND INDIAN TRIBAL
GOVERNMENTS”
ORIGINAL VERSION IN 1968
MAJOR REVISION IN 1995
   “Tightened up” the documentation requirements for
    claiming personal services cost
AVAILABLE ON THE WEB:
   http:/www.whitehouse.gov/omb/circulars/
          a087/a87_2004.pdf
           A-87 ORGANIZATION
  Highlighted items are relevant to Locals
ATTACHMENT A - GENERAL PRINCIPLES FOR DETERMINING
ALLOWABLE COSTS

ATTACHMENT B - SELECTED ITEMS OF COST

ATTACHMENT C - STATE/LOCAL-WIDE CENTRAL SERVICES
COST ALLOCATION PLANS (NEW)

ATTACHMENT D - PUBLIC ASSISTANCE COST ALLOCATION
PLANS (NEW)

ATTACHMENT E - STATE AND LOCAL INDIRECT COST
PROPOSALS
            THE PURPOSE OF
           OMB CIRCULAR A-87:
SETS POLICIES/PROCEDURES FOR IDENTIFICATION OF
COSTS OF PROGRAMS
IDENTIFIES ALLOWABLE AND UNALLOWABLE COSTS
SPECIFIES COST ALLOCATION CRITERIA/REQUIREMENTS
STIPULATES DOCUMENTATION REQUIREMENTS
MANDATES COGNIZANT AGENCY APPROVAL/APPEAL
CONCEPT
BRINGS “ORDER AND RATIONALITY” TO THE COST
DETERMINATION AND APPROVAL PROCESS
A-87 DOES NOT OVERRIDE A PROGRAM’S SPECIFIC LAWS OR
REGULATIONS
             OMB CIRCULAR A-87
                         Application
The Circular does apply to
   Cost-reimbursement contracts
   Grants and cooperative agreements
   Sub-grants or subcontracts awarded to governmental
    units under grants awarded to the Federal recipient
    (grants to states for example)
   Costs presented as required program “match”
        Match refers agreements that stipulate a “cost-sharing ratio”
        between the funding source and the grant award recipient
        Total overall “allowable program cost” is shared
           OMB CIRCULAR A-87
                     Summary
The Circular summarized in one sentence
 The Circular is all about:
     ACTUAL COSTS incurred by
     STATE (and Local) GOVERNMENTS, and
     documenting the BENEFITS RECEIVED and the
      ALLOWABILITY of the costs, when
     the costs are presented for REIMBURSEMENT by
      FEDERAL agencies, under
     “COST REIMBURSEMENT” type arrangements
         OMB CIRCULAR A-87
                  Summary
More specifically, A-87
   Defines the concept of actual cost, and
    reimbursable cost
   Describes direct vs. indirect costs
   Requires consistent treatment of cost
    elements
   Many other specific rules about cost
    documentation standards
   Does not supercede specific federal programs
    that may limit reimbursement of indirect costs
         OMB CIRCULAR A-87
                  Summary
General vs. Specific Guidance
   OMB A – 87 provides GENERAL Guidance
   Other documents provide more specific
    guidance related to administration and audits
    of federally funded programs
   (next slide)
          OMB CIRCULAR A-87
                     Summary
Other specific guidance
   ASMB C-10 “Supplemental Guide” published by
    DHHS to provide procedural guidance for
    implementation
   Specific program legislation may supersede A-87
   “Single Audit Act” and OMB Circular A-133
    established uniformity among federal audit
    requirements
   GAAP - Audit guides, such as Federal Acct Stds
    Board
   Finally, the auditor’s judgment regarding compliance
                OMB CIRCULAR A-87
                             Summary
   ASMB C-10: Implementation Guide for OMB Circular A-
   87. The Organization of Guide follows A-87
Available on the web at “http://www.hhs.gov/grantsnet/state/asmbc10.pdf”
   Section relevant to LOCAL governments include:
     Part 1: Basic Information

     Part 2: General principles for determining allowable

      costs
     Part 3: Selected items of cost

     Part 6: State and Local IDC Rate Proposals, with

      Illustrations
              OMB CIRCULAR A-87
                    Summary Review
HIGHLIGHT in Manual
 Manual page 1
     Beginning at bottom of page one, last paragraph: “The Circular
      addresses the key concepts of ….
     End: To the end of the paragraph (on page 2)
 Manual page 2
     Highlight the web address for OMB A-87 and also ASMB C-10


READ in Manual
 Manual page 2 – the section “STAGES of GRANT
 ASSISTANCE and the APPLICABILITY of CIRCULAR
 A-87”
 Composition and Allowability of
            COST
Factors affecting the allowability of COST
   Necessary and reasonable
   Allocable to Federal awards. This means
      joint costs must be allocated to ALL benefiting
      activities, including non-federal and unallowable
      All allocated cost elements must at least have
      some POTENTIAL BENEFIT to Federal awards
   Authorized and not prohibited under State or
    local laws or regulations
 Composition and Allowability of
            COST
Factors affecting the allowability of COST
continued:
   Costs must conform to any limitations or exclusions,
    including terms and conditions of federal awards
   Costs must be CONSISTENT with policies and
    regulations that apply uniformly to both Federal
    awards and other (non-grant) activities
   Costs must also be accorded CONSISTENT
    TREATMENT
      Example: Same type of cost elements can’t be assigned as
      direct in one circumstance and indirect in another!
 Composition and Allowability of
            COST
Factors affecting the allowability of cost
continued:
   Conform to GAAP
   Must not be included as cost or match for some other
    federal award (unless provided by award)
   Net of applicable credits (Like ISU reimbursements
    for cost for Extension Services)
   Costs must be adequately documented
   Composition and Allowability of
              COST
  Some costs are specifically UNALLOWABLE
  under OMB A-87
    Selected items of cost are A discussed in
     ATTACHMENT B of the Circular
    The list discusses the ALLOWABILITY of certain

     items and discusses DOCUMENTATION
     REQUIREMENTS
    Some common “unallowable” items are shown on the

     next slide
Ref: OMB Circular A:87 Attach B: Selected Items of Cost
 Composition and Allowability of
            COST
Examples of unallowable costs (whether direct
or indirect) continued:
 Advertising, except for recruitment or procurement,
  unless specifically required by the grant award
 Most public relations, unless specifically required by
  the award
 Most legal defense costs (legal expense required in
  the administration of federal awards is allowable)
 Equipment o r other capital expenditures (a “use
  allowance” or “depreciation” may be computed and is
  allowable)
Ref: OMB Circular A:87 Attach B: Selected Items of
  Cost
 Composition and Allowability of
            COST
Examples of unallowable costs continued:
   Fund raising and investment activities
   Lobbying
   Unused facilities and “idle capacity” (normally)
   Losses that could have been covered by insurance
   Interest, but exceptions are made for interest on
    financing of allowable equipment or buildings
   Others – see Attachment B for discussion

Ref: OMB Circular A:87 Attach B: Selected
Items of Cost
  Composition and Allowability of
             COST
DIRECT vs. INDIRECT costs
 No universal rule for determination of Direct vs.
 Indirect
 Direct costs are those that are readily assignable
 to specific “cost objectives”
     For example staff that keep an activity timesheet
 Indirect costs benefit multiple cost objectives,
 but are not readily identified to any particular
 cost objective
     Indirect costs in one agency may be direct in another
      agency – but should be consistent within own agency
   Composition and Allowability of
              COST
HIGHLIGHT in Manual
  The first sentence of each “allowability factor”
  (starts on p. 4)
  Highlight the definition of Direct Costs (first
  sentence only under “Direct Costs”, page 5)
  Highlight the definition of Indirect Costs,
  including two points (Under Indirect Costs on
  page 6)

Ref: Manual pages 4 and 5
            Composition of Cost
            Salaries and Wages
  Documentation of Salaries and Wages
   A-87 contains strict requirements for
    documenting personal services costs where
    employees split their time between DIRECT
    and INDIRECT activities
  Important points (suggest highlighting in Manual):
    Costs to be based on “standard payrolls”, whether
     direct or indirect employees
Ref: Manual pages 6 and 7
              Composition of Cost
              Salaries and Wages
  Important points on Salary and Wages continued
      For employees who work SOLELY on a Federal grant
       award:
         At least a semi-annual Certification signed by the employee
         that confirms their assignment
      For employees who work partially INDIRECT and
       partially DIRECT
         Must keep a Personnel Activity Report (PAR) to support the
         split between indirect and direct
         A “PAR” is basically an ACTIVITY TIME SHEET with two
         categories (DIRECT time vs. INDIRECT time)
Ref: Manual page 6 -7
             Composition of Cost
             Salaries and Wages
Important points on Salary and Wages continued
   The PAR requirements are especially important to agencies that
    have employees who split their time between direct and indirect
   Example: If a PA spends some time working on a an indirect
    activity (like general agency-wide accounting work) and spends
    some time working in particular program areas: He or she must
    keep a record of this activity on a PAR with at least two
    categories:
   Category 1: Estimate of % of time on all INDIRECT activity
    (combined)
   Category 2: Estimate of % of time on all DIRECT activity
    (combined)
              Composition of Cost
              Salaries and Wages
  MAXIMUS has designed a simplified Personnel
  Activity Report (PAR) that may be used by the
  County
  See Handout – PAR examples
      Jane Jones signed entered her estimated hours each
       month and signed the form.
      Note: If for the first year “Jane Jones” did not keep a
       monthly time estimate, suggest she completes her
       percentage of time for the FULL YEAR and sign

Manual pages 6 and 7
Also, refer to “PAR form” handout
            Depreciation or use
               allowances
  Depreciation or “use allowances” are a means of
  allocating the cost of equipment or building assets
  Depreciation is possible if the formal accounting records
  of the county record depreciation under a standard fixed
  assets policy
  A “use charge” can be used instead of depreciation
  (optional)
      Building use charges are calculated at 2% of the acquisition
       value, including improvements
      Equipment use charge are calculated at 6 2/3% of original
       acquisition value

Refer to “Use Charges” handout, and Manual pages 21-22
            Depreciation or use
               allowances
   Depreciation or use charges are normally charged as indirect in
   the indirect rate proposal (ICRP( calculation worksheet
    Exception: The County may choose to charge occupancy space as
      direct certain programs, including depreciation.
   If the County chooses to identify some of the building space as
   direct (or as “match”)
       Requires a square footage cost allocation method be applied to all
        direct and indirect space to determine the appropriate cost
       Then only the INDIRECT office space can be included in the
        indirect rate proposal
   For Equipment Use, we recommend that only the indirect
   equipment items be included in the use charges or depreciation

Refer to OMB A-87, Attachment B (11) for more information on
   Depreciation and Use Charges, and pages 20 and 21 of MANUAL
Review of A-87 and Cost Principles
 So far we learned:
    The basic elements of cost are INDIRECT, DIRECT
     and also EXCLUDED and UNALLOWBLE
    Indirect costs are defined as costs that are NOT
     READILY identified to specific purposes
    An indirect cost rate is the ratio of INDIRECT to
     DIRECT (or BASE)
    That the provisions in OMB Circular A-87 is important
     (and also the Guide ASMB C-10)
Review of A-87 and Cost Principles
 So far we learned (continued):
    Basic concepts in OMB A-87:
       Like elements of cost are to be treated CONSISTENTLY
       Documentation of Personal Services costs is important
       There are certain costs that are UNALLOWABLE or have
       special documentation requirements
       ATTACHMENT B of OMB A-87 provides a useful discussion
       of cost, and documentation standards
       “Building use or equipment use charges may be included as
       indirect costs. Special allocation procedures required if
       County chooses to include space costs are DIRECT
  INDIRECT COST RATE
    PROPOSAL (ICRP)


HOW TO DEVELOP A RATE &
   DOCUMENTATION
     REQUIREMENTS
      Indirect Cost Rate Proposals -
                  Basics
  Mechanism to easily estimate the full cost
  of providing direct services
     Based upon costs for a full fiscal year
        “Organization wide”
     Provides a ceiling up to which the county may
      recover a portion of its allowable indirect costs
     Indirect costs may be used to satisfy matching
      or cost sharing requirements if not claimed
Manual page 7
       Indirect Cost Rate Proposal -
                  Basics
Types of approvals for rates
  “Provisional/Final”
      Requires an retroactive adjustment to actual cost
       reimbursement claims once final costs are known
  “Fixed with Carry Forward”
   This type will probably to be used by the Counties
   The cost adjustment is “carried-forward” and is

    embedded in the newly proposed rate
  Predetermined rate (probably not used)
Manual page 8
      Indirect Cost Rate Proposal -
                 Basics
Types of Direct Cost Base
     Direct salaries and wages
     Modified total direct cost (MTDC)
        Excludes distorting items such as capital, debt service,
        subawards, assistance payments, and provider payments
        This type of base is illustrated in our Example IDC forms
     Other bases might be chosen such as
        S&W including fringe benefits
        Total direct cost (if no material distorting items)


  Manual page 9
       Indirect Cost Rate Proposal -
                  Basics
  Format of the ICRP
      “Simplified Method” is recommended as illustrated
    in ASMB C-10 (Section 6.2.3)
   The simplified method is used where each of the

    agency’s major functions benefit from its indirect
    costs to approximately the same degree
   If not, a more complex cost allocation plan is

    necessary (not covered in this training)
Manual page 10
Indirect Cost Rate Proposal - Basics

  Under the SIMPLIED METHOD, a
  determination is made as to which
  activities are DIRECT COST and which
  are INDIRECT costs
  A set is Schedules is prepared based
  on one full year of agency cost
      to estimate a proposed rate to be used in
      some future year
Manual page 10
  Indirect Cost Rate Proposal – Steps
           “Simplified Method”
  Step 1 – Adjust INDIRECT costs for the period:
      Eliminate any indirect costs directly reimbursed
       through a federal award specifically for that purpose
          For example, if a construction grant was received than no
          depreciation or use allowance (rare)
   Eliminate administrative salaries in the indirect pool
    that were funded as direct by a grant
   Eliminate any A-87 unallowables and capital

    improvements, and “applicable credits”
   Add use allowances if this option is chosen

Manual page 10
Indirect Cost Rate Proposal –
            Steps
Step 2 – Adjust DIRECT costs for the period:
   Eliminate any flow through funds and capital
    expenditures
Step 3 – Divide the total allowable indirect
costs by an equitable direct cost base
   Usually Salaries or Wages, or Modified Total
    Direct Cost
Manual Page 10 and see also page 9 (Direct Cost Base)
    ICRP Instructions and Schedules
              Introduction
Please note:
  There is not single, uniform approach that will
  satisfy the needs of all counties
  Various counties may have their won particular
  needs and circumstances
  Various options will be addressed
  It may be necessary for counties to tailor the
  worksheets to meet their own particular needs
Manual page 11
     ICRP Instructions and Schedules
               Introduction
“ISU Allocated Costs” - Discussion
   ISU employees are located on-site
   Logically they should receive their share of some of the
   indirect costs – This complicates the rate computations!
   These activities are identified on Schedule 2, and the
   ISU share of cost is then transferred to a separate
   column entitled “ISU allocated Costs” on Exhibit 1 (Col 8)
   The basis for the County/ISU allocation on Schedule 2 is
   the number of FT Employees (County vs. ISU
   employees)
   Example: 10 employees total, of which 2 are ISU. Therefore the
     ISU allocated share is 20% of certain indirect costs.
               ICRP Instructions
           Exhibit 1 – ICRP Summary
  Exhibit 1 is the ICRP SUMMARY SCHEDULE
  Explanatory “Notes to ICRP Exhibit 1” are
  contained in a MS Word document
  Some Column entries are made directly from the
  Expenditures Worksheet 2 (explained later)
  Some Column entries are transferred from
  Schedules 2 through 8 (explained later)

Ref: See Manual page 12 for a discussion of Exhibit 1; see
  also “Exhibit 1” of sample forms, and “Sample IDCR
  Proposal Notes” (MS Word Document)
            ICRP Instructions
   Exhibit 1 – ICRP Summary (cont’d)
Column 1 contains the TOTAL COSTS, and then
assigns all cost to 6 additional columns:
  Col 2: Excludable costs (flow-through)

  Col 3: Expenditures not allowable (may also included

   in base if it either generated or benefit from the
   indirect cost)
  Col 4: Indirect costs – all must meet A-87 cost

   allowability requirements
  Col 5: Direct Salary and Wages - chosen BASE for

   example
  Col 6: All other Direct Costs

  Col 7: ISU Share Allocated costs
                 ICRP Instructions
     Exhibit 1 – ICRP Summary (cont’d)
Expenditures that are exclusively direct can be entered
directly from the Summary Worksheet 1
   Example: By policy, the Director’s salary is considered 100%
    direct and is entered in the DIRECT column
Other expenditures are entered from Worksheets 2
through 8, and are transferred to the appropriate
columns
The rate is calculated at the bottom of the worksheet,
and is based on the following:
                    The sum of the “Indirect” column (A)
                                 divided by
    The sums of the “Direct S & W” col. plus the “Other Direct” col. (B + C)
             ICRP Instructions
    Worksheet 1–Expenditures Summary
  Worksheet 1 is the initial SUMMARY OF
  EXPENDITURES
  Expenditures are transferred from the most
  recent annual financial statement (AFR 4)
  The purpose of the worksheet is to help
  organize the expenditure date for easy entry in
  other worksheets
  The total costs should reconcile to Column 1
  total on Exhibit 1
Ref: Worksheet 1 in Sample Forms packet
               ICRP Instructions
  Worksheet 2 – Allocation of Costs to ISU
                Personnel
  Enter number of ISU and total employees in Line A & B
  Enter the salary for any indirect employees that partially
  benefit ISU employees
  Enter fringe benefits for the same employees, which is
  transferred from Worksheet 3
  Janitor salary and fringe and building occupancy costs
  may be entered
  Other costs are transferred from Worksheet 3 through
  Worksheet 8 (see instructions for Worksheets 2 – 8)
  The final column totals are entered on Exhibit 1 in the
  INDIRECT and the ISU ALLOCATED SHARE columns
Ref: Worksheet 2
                  ICRP Instructions
  Worksheet 2 – Allocation of Costs to ISU
            Personnel (cont’d)
  Special note on employees who are split: DIRECT and
  INDIRECT salary expenditures
      Some employees may split their time between direct and indirect
       (based on their PAR %’s)
      IF so, only the INDIRECT share of the salary is entered on
       Worksheet 2; the DIRECT share is entered on Exhibit 1
      Julie Smith in our example has $2,221 entered on Exhibit 1 and
       $8,882 entered on Schedule 2
  Similar process for fringe benefits
      see Worksheet 3 instructions next slides


Ref: to Manual page 13 and 14 for a discussion of Options
  for entering salary and wages cost
                  ICRP Instructions
       Worksheet 3 – Summary of Employee
                     Benefits
  Enter all benefit amounts, by employee, in the
  appropriate “benefit type” columns. Include all
  employees.
  Employees that partially benefit ISU staff are entered in
  Section I; Others are entered in Section II
  Transfer the benefit type totals to one of three columns:
      Col 1 Indirect: Enter amounts here if employee is indirect, but
       does NOT benefit ISU staff
      Col 2 Direct: Enter amounts here if employee is direct
      Col 3 ISU Allocated: Enter amounts for INDIRECT employees
       that PARTIALLY benefit ISU staff.

Ref: Worksheet 3 and Manual page 15
              EXERCISE
    Exhibit 1 and Worksheets 2 and 3
The purpose of this exercise is to:
   Understand Worksheet 3 (Benefits)
   Lean to post the entries from Worksheet 3 to:
      WORKSHEET 2 if indirect costs are to be
      allocated to ISU/NonISU employees, OR to
      EXHIBIT 1 if no allocation is required
Refer to the exercise instructions on the bottom
of WORKSHEET 3
I will show you the completed exercise
worksheets after you do the work
            ICRP Instructions
 Worksheet 3 – Summary of Employee
          Benefits (cont’d)
Special note on employees who are split: DIRECT and
INDIRECT fringe benefit expenditures
  Some employees may split their time between direct
   and indirect (based on their PAR %’s)
  The total of all of the benefit cost is entered on
   Worksheet 3
  However, the DIRECT share is entered in the “Direct”
   column, The INDIRECT share is entered in the
   “INDIRECT” column OR the “ISU ALLOCATED”
   column on Worksheet 3
  Julie Smith in our example has $292 entered in the
   DIRECT column and $1,166 entered in the ISU
   allocated column on Schedule 2
                     ICRP Instructions
                          Worksheets 4 - 8
        These similar worksheets provide an allocation of the
        other operational costs that might be indirect or
        partially indirect
          Worksheet 4 – Travel expenses
          Worksheet 5 – Communications expenses
          Worksheet 6 – Supplies expenses
          Worksheet 7 – Equipment (non-capitalized) expenses
          Worksheet 8 – Insurance, Legal and Bonds expenses
       The posting instructions:
         Col 1 Indirect – Transfer sum to Exhibit 1 INDIRECT column
         Col 2 Direct – Transfer sum to Exhibit 1 DIRECT column
         Col 3 Allocable to ISU – Transfer sum to the appropriate
          column in Worksheet 2
Ref: Manual pages 16 and 18
                   ICRP Instructions
               Building Occupancy Costs
  Building occupancy costs are discussed on pages 16
  through 18 of the manual (please read)
  In general - options are available:
      If all costs partially benefit ISU staff, and the County does not
       choose to charge any as direct costs can be entered on
       Worksheet 2
      If the County desires to charge some building costs directly to
       grants (or used as match) it will be necessary to allocate the
       costs based on sq footage or FTE counts (see manual page 17
       and 18)
      If allocated, the costs may be entered on Schedules as follows:
          Directly to Exhibit 1 (and assigned to direct or indirect columns)
          Or to Exhibit 2 if some to be allocated to ISU/non-ISU personnel
Ref: Manual pages 16 through 18 for complete discussion
           Calculating Equipment Use
           and Building Use Charges
   See manual page 20 and 21 if you wish to charge a use
   allowance for either buildings or equipment.
   We recommend equipment use be calculated only for
   “indirect” equipment (like accounting office or Director’s
   Office Equipment
   When calculated the use charges can be entered as
   follows:
     Building Use – Enter on Worksheet 2 to be allocated to ISU/non
      ISU personnel; or directly on Exhibit I Indirect column if no ISU
      benefit
     Equipment Use – Enter on Worksheet 2 also, assuming indirect
      equipment benefits both ISU and non-ISU personnel
Ref: Manual pages 20 and 21; also see examples handouts of
  Equipment Use and Building Use calculations
FINAL COMPLETION of ICRP
Follow instructions in Manual pages 22 -23
Make sure the required certification is signed by
the Board chairperson
Assemble all the Exhibits, Worksheets and
supporting documents
Normally the ICRP package should not have to
be submitted for federal approval (local
governments are exempted unless requested)
The State funding source may choose to review
The documents should be kept on file at least 3
years
          QUESTIONS
             for
           MAXIMUS

Robert Antrim, or Kurt Sames
217-789-0041
Robertantrim@maximus.com

				
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